Sweepstakes owner seeks injunction

The owner and software licensor of an internet café in Davidson County are asking a local judge to review new sweepstakes technology they argue is lawful.

BY NASH DUNNThe Dispatch

The owner and software licensor of an internet café in Davidson County are asking a local judge to review new sweepstakes technology they argue is lawful.Last week, Davidson County sheriff's deputies charged operators of the Hickory Tree Business Center in Midway with misdemeanor possession of electronic machines and other devices for sweepstakes. The citation, one of at least three others issued throughout the county, follows a recent North Carolina Supreme Court decision that upheld a 2010 state law banning the controversial gaming machines.B&J Daniels Inc. and International Internet Technologies, LLC, both stakeholders in the business center, requested the courts enjoin any further law enforcement actions while a judge reviews new software created in response to the law, according to a declaratory judgment complaint and motion for temporary restraining order filed in Davidson County Superior Court on Tuesday.A temporary restraining order hearing was held Tuesday afternoon in Superior Civil Court, and Judge Robert Johnson asked attorneys for B&J Daniels and IIT to prepare an order for him to review, according to court records.The complaint and restraining order target Gov. Pat McCrory, Secretary of Crime Control and Public Safety Kiernan Shanahan and Davidson County Sheriff David Grice.Davidson County Attorney Chuck Frye said he has received service of the filings and is reviewing the documents before potentially filing a response.The N.C. Attorney General's Office had yet to receive a copy of the filings Thursday afternoon, said Noelle Talley, spokeswoman for the office.“We believe the law and the ruling are clear, and we're ready to defend their enforcement,” Talley said in an email. Winston-Salem attorneys Michael A. Grace and Christopher R. Clifton, who represent the plaintiffs, alleged that IIT, which licenses computer software to retail businesses in North Carolina, modified its sweepstakes software system to meet provisions of the law.N.C. General Statute 14-306.4, otherwise known as House Bill 80, mandates it is unlawful for anyone to operate electronic machines to conduct or promote a sweepstakes through the use of an entertaining display, including an entry process and the reveal of a prize."In previous versions of the IIT system sweepstakes, customers would choose a game display prior to learning whether their sweepstakes entry was a winning entry," according to the filings. "The results of the sweepstakes entry were revealed to the customer through a simulation of a game."However, modifications to IIT software were such that the process of submitting and revealing the sweepstakes entries at the computer terminal are separate from — and happens prior to — any game play on the network, the attorneys argued."No video games or game simulations are played while the sweepstakes is entered or while the results of the sweepstakes are revealed," according to the filings. "Instead, after the sweepstakes has been conducted and concluded, a customer can choose one of several options to submit additional entries, watch a fun game that is unrelated to the sweepstakes, buy additional Internet time on the network, or exit the sweepstakes entry application and use the terminal for any one of a number of other non-sweepstakes related activities."The attorneys are seeking a restraining order to protect Hickory Tree Business Center and other IIT internet cafés from further actions, including potential seizures and additional charges. Violators of the sweepstakes ban are guilty of a class 1 misdemeanor for the first offense, guilty of a class H felony for a second offense and guilty of a class G felony for a third or subsequent offense, according to the law.At the signing of the proposed temporary restraining order, the judge must set a hearing within the next 10 days to decide whether to make this order permanent, according to state law.In December, the state Supreme Court ruled in two cases in favor of a 2010 law banning sweepstakes machines as a form of gambling. It reversed a decision made by the Court of Appeals, which declared the statute an overbroad restriction on protected speech and struck it down as unconstitutional.IIT, based in Oklahoma, was one of several amusement-machine and other companies that originally challenged the state law and were listed as plaintiffs in the Supreme Court decision.

Nash Dunn can be reached at 249-3981, ext. 227, or at nash.dunn@the-dispatch.com.

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